Brexit: Thursday Afternoon Update

Managing Director
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Posted on July 7, 2016

Story of the Day: A Win for the Ladies
Skulduggery within the Conservative Party reached new heights in the last 24 hours, as Tory MPs return to the polls to narrow the leadership race down to two contenders.
Last night, rumours of collusion solidified as Gove’s campaign manager urged May’s supporters to vote for Gove in today’s poll in order to snuff out Leadsom’s bid. A lengthy text message outlined the need to do so citing ‘national interest’ and a ‘seriously frightened’ Gove campaign at the prospect of Leadsom becoming PM. Much of the criticism surrounding Leadsom is regarding her noticeable lack of experience and exaggeration of her resume.

Meanwhile, Tory MPs are being pressured to vote for Leadsom by groups like UKIP-backed Leave.EU. According to reports, these MPs are being bombarded by messages and threats. Certainly this leadership race will be remembered as one of the bloodiest in party history.

Despite Gove’s efforts he was defeated in today’s balloting making it a certainty that the next Prime Minister of the UK will be a woman. Theresa May overwhelmingly swept her competition acquiring 199 votes, with Leadsom trailing at 84 votes to Gove’s 46. The two women, May who backed Remain and Leadsom who voted Leave, are now vying for Westminster’s top spot. A women’s single final, not only in Wimbledon.

The next round of voting opens the polls to members of the Conservative Party. The party’s latest figures indicate that their eligible supporters approximately number 150,000. Those who can vote must have been members for at least three months.

In terms of timing, former Conservative Party Chairman Grant Shapps has begun a petition for the leadership election to be fast-tracked for an end of July vote. The UK needs certainty and that starts with political leadership, and for that matter political opposition – neither of which are present. The Tories may come under increasing pressure from the markets to produce a leader sooner rather than later. It is our view that stringing out the leadership contest until September is unrealistic.
Labour Party
The party coup has begun to cool as it is clear that prospects of Corbyn stepping down or being defeated are unrealistic. While there have been reports of general progress amid talks of senior Labour figures with trade unions today, any substantial advances vis-‘-vis alternative Labour leadership would come as a surprise. It has also become clear since the coup that a leadership election is everything Labour MPs should avoid for two reasons; they will not defeat Corbyn and the repercussions of their own defeat will break the party apart.

The Markets
The markets here in The City rallied strongly throughout the day although this is not reflected in their final result as both the FTSE 100 and FTSE 250 dipped in direct response to news of the Tory leadership race. Each index closed out the day above one per cent. The markets in Germany and France persevered to see slight gains after a difficult day yesterday.
Statements from the United States Federal Reserve policy meeting were published yesterday confirming that, due to Brexit, the US Federal Reserve will not increase interest rates in the foreseeable future.

A lurking economic crisis can be directly linked to the total and utter lack of political leadership in the UK today. Currently, the only leadership in this country to be found is the Canadian-born Governor of the Bank of England, Mark Carney.
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To speak to someone on the ground in London, connect directly with our London lead Ashley Prime at aprime@navltd.com.

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